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Constraints and innovation – is there a silver lining?

The Silver Lining is positioned as a case for the strategic value of innovation in economic downturns. It evolves into a reflection on the role of constraints in innovation and on the possibility of successful innovation within large, complex, organizations. Scott Anthony, the author, is a former student and current colleague of Clay Christensen and is President of the boutique consulting firm Innosight. The book was conceived in October of 2008 and the manuscript delivered to HBS Press in January and offers itself as a good example of the value of tight constraints. (Here is the obligatory book website)

The Silver Lining presents a succinct, focused, argument for how to do effective disruptive innovation within existing organizations. This runs contrary to the research conclusions in Christensen’s The Innovator’s Dilemma that linked successful disruptive innovation with new entrants not industry incumbents. The management practices of successful market leaders emphasize the prudent deployment of resources to address clearly understood problems and clearly meaningful opportunities. Those practices are about coloring inside the lines. Disruptive innovation goes beyond just coloring outside the lines to redrawing the lines and creating entirely new pictures.

Anthony breaks his argument into three threads; creating capacity to innovate, applying ‘tricks of the trade’ to generate good innovation options, and grafting innovation skills into existing organizations. In any time, organizations are reluctant to have resources sitting idle. In today’s environment, even prudent levels of slack capacity have disappeared. The first step in creating capacity for innovation, then, is to look at the portfolio of projects and initiatives underway for what can be stopped or redirected. Anthony uses a look at the portfolio as a quick way to introduce and differentiate key concepts of disruptive vs. sustaining innovation. For example, he demonstrates why conventional approaches of ranking projects on expected financial returns such as first year revenues or net present value can select against precisely those opportunities with the greatest long term potential.

In his second thread, Anthony highlights approaches and techniques that have emerged as the most powerful in identifying and shaping innovations to reach their disruptive potential. First, he offers way to attend to the external environment and potential customers that make it more likely to find or generate new product and service ideas. These include paying more attention to less-demanding rather than more demanding customers to identify markets where your current products are overkill and a simpler product or service would represent a real opportunity.

Finally, Anthony offers advice and reflections on ways to fit disruptive innovation into established organizations that have been designed, in large measure, to prevent and suppress disruption. Here’s how Anthony puts it:

It’s certainly not fear of new concepts and management theories; executives seem to buy and change them as easily as a new set of clothes. But executives demonstrably favor ideas that involve ways to do what they are currently doing in a more efficient, more effective manner. Systematizing disruptive innovation is a different beast. Senior executives have to think and act in ways that run counter to everything they have done to be successful in their careers. As Putz notes, they must be multi-paradigmatic in how they structure their business model, run their firms, lead their teams, and most difficult of all, see themselves and frame their identity as leaders. Simply put, leaders who want to capture the potential of disruptive innovation need to be "consistently inconsistent" with their teams and themselves, and still hold it all together and deliver results quarter after quarter. (pp 154-155)

Improving the organizational environment for disruptive innovation requires updating and adapting organizational processes for selecting and managing a portfolio of innovation efforts. The theory building and experience base that Anthony, Christensen, and others have been developing provides a language system, concepts, practices, and examples to blend into existing organizational systems. How well this will work depends greatly on organizational culture; a topic that Anthony does not address in depth in this short work.

Disruptive innovation is a complex notion. It takes multiple passes to grasp its strengths and limitations. The Silver Lining, by virtue of its own constraints, offers an armature around which you can build your evolving understanding.